Contribution to the discussion:

SPHS Capacity Building Sessions at the UN Global Supplier Meeting

Elisa Tonda

Acting Head, Responsible Industry and Value Chain Unit

UNEP

2

Sustainability mega-forces driving business strategies

Climate changeEnergy and fuel availabilityMaterial resource stocksWater suppliesPopulation growthFood securityConcentration in urban areasDeterioration of biodiversity and ecosystemsWorkers and communities’ healthIncreased intensity of natural & technological disasters

Sustainability as source for innovation and value creation

Eco-innovation approach

Eco-innovation provides an ideal approach to promote the application of industrial symbiosis

Eco-innovation promotes systemic innovation based on holistic life-cycle approach throughout company’s operations - products (goods / services), processes, market approach and organizational structure.

It aims at influencing and involving stakeholders along the entire value chain.

Building and fostering collaboration for the identification of innovative solutions

The Business Case for Eco-innovation

How to communicate the benefits and opportunities of Eco-innovation to stakeholders, including companies.

It helps service providers engage companies, especially SMEs.

Available for download at: www.unep.org/BCforEI

Business Case for Eco-innovation:5 Drivers

Access new and expanding markets

New market segments (low and high end)

Untapped markets for innovative solutions

Company supply chains and SPP

Increase profitability along

the value chain

Ultimate efficiency

Enhanced resilience

Enhanced knowledge and

technical capacity

Stay ahead of standards and

regulations

First-mover (competitive) advantages

Industry leadership (brand

reputation)

Inform regulation

Attract financial resources

Banks, long term investors, crowd

funders

Local and national

authorities

Mergers and acquisitions

Increase productivity and

technical capacity

Acquisition of knowledge

Strong skill base

Increased employee

engagement

Company cases of Eco-innovation

Ecover (Belgium)Growth of 10-25% from 2002-2010

Eco2Distrib (France)

Growth of 15%

Interface (USA)

35% global market share

Triodos Bank (The Netherlands)Doubled in size from 2008-2013

KUO IndustrialGroup (Mexico)Expandedthrough new export marketsegments

Specialized Solar Systems(South Africa)Tripled size in three years

Natura (Brazil)Access low-end project through eco-innovation

Case: Ecover

Eco-innovation at the core of their business strategy considering entire value chain. Open innovation model - Work across the value chain: Philips (maker of washing machines) BASF (chemicals) and retailers for refill through dispensers = strategic positioning• Innovations in all dimensions:

– Product: Elimination of harmful chemicals and 100% biodegradable – Packaging: 100% use of bio-based plastics, 100% recyclable– Process: manufacturing & distribution channels– Organizational structure

Business Benefits: Added value –a sustainable product reduced risk of harmful chemicals that meets client needs• Average annual revenue growth of 10-20 % in a flat market• Annual sales exceeding $200 Million • Expansion to large retail stores (market access)• Innovations through open source collaboration enables them access to

funding and resources• Benefited from Sustainable Public Procurement (municipality of Ghent)

Eco-innovation at the core of their business strategy

Change the ‘norms’ in consumption patterns of electricity from AC to solar powered DC

Provide sustainable energy solutions to meet market demand in areas of

high energy poverty.

How?

Product: an innovative Direct Current (DC) micro grid service-system fed by solar power.

Designed taking a life-cycle approach, with a modular base.

Modify home appliances to function on DC (2/3 less energy to AC)

Process sold as a service-system (new to the market)

Partnership with local government and technical institutions.

Enabled research and additional funding

= roll out to the critical mass.

Smart box serves as the functioning mechanism (remote access)

Free training for installations, use and maintenance.

Business Growth:

• In 3 years the company has tripled in size

• Expanded to 4 other countries in the region.

Case: Specialized Solar Systems, South Africa

Case: Natura

Product SOU compared to conventional cosmetic products:

• 70% less plastic used

• 50 % less production costs (less manufacturing time)

• 60% lower CO2 emissions

• Lower transportation costs

• Innovation in the formula (ingredients)

• Product that can be sold for 50-70% less retail price

Business Strategy: Innovation for market differentiation and sustainability

How? • Continuous research: new technologies, market trends• Open innovation model and R&D platform involving partners and scientific

institutions • Investment from national financial institutions • Select suppliers on a “shadow price” • Creation of partnerships to build a chain with higher added value. • Life-cycle approach A calculator is used for all the indicators of an Environmental

table, and simplified packaging LCA, for all sold products.

Business Growth: Market share of 23 % in Brazil and annual growth of 26 % in 2005-2010.

Case: Eco2DistribBusiness Strategy:• Change patterns of consumption for consumer goods • Respond to the market demand of end consumers, product manufacturers, retail.• Expand to market leadersHow? Work with actors in the supply chain to reduce the env. and economic cost of

individual packaging. Manufacture machines with to dispense fluid products in retail stores Connect to product suppliers and retail stores Business Growth: Sales growth of 15 % annually. (Increased income by almost 200 % in 3 years)Expansion to large supermarket chains and international markets.

Case: SafeChemBusiness Strategy: Based on the chemical leasing model, the company manages the product-specific risks of chlorinated solvents for its clients. Respond to anticipated regulation on VOC solvents.How? -Offering a chemical leasing model, where clients pay per part cleaned, instead of the volume of solvents. -In 2007 the VOC directive was implemented throughout Europe. At that point, the company had a product that was tested and proven, and that no one else could offer.=competitive advantage

Eco-innovation and Industrial Symbiosis with RECPnet

A - Vietnam: Joint Policy Mainstreaming & Pilot SME Application (Agri-food)B - Sri Lanka: Pilot SME Application (Agri-food)C – South Africa: Pilot SME Application (Metals)D – Uganda: Pilot SME Application (Agri-food)E – Kenya: Policy Mainstreaming

F – Egypt: Pilot SME Application (Chemicals)G – Colombia: Joint policy mainstreaming & pilot SMEs Application (Chemicals and Metals)F – Peru: Joint policy mainstreaming & pilot SMEs application (Chemicals and Metals)

Information on the Eco-innovation project:

www.unep.org/ecoinnovationproject